Global Innovation and Knowledge Diffusion

Nelson Lind and Natalia Ramondo
Additional contact information
Natalia Ramondo: UCSD

No 1364, 2019 Meeting Papers from Society for Economic Dynamics

Abstract: This paper develops a model of economic growth and trade in which countries innovate ideas that diffuse across the globe. This model dynamically generates max-stable multivariate Frechet productivity distributions and implies a mixed-CES import demand system. This demand system allows for rich substitution patterns in trade flows that arise from spatial correlation in technology. In the special case of a pure innovation model where countries do not share ideas, productivities are independent across space, and the demand system is CES. As a consequence, departures from CES reflect how knowledge diffusion generates technological similarity. In the general case with diffusion, high innovation countries tend to have dissimilar technology and their goods are less substitutable. These theoretical results provide a direct connection between estimable substitution patterns and the underlying dynamics of innovation and knowledge diffusion.

Date: 2019
New Economics Papers: this item is included in nep-cse, nep-ino, nep-knm, nep-tid and nep-ure
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Related works:
Journal Article: Global Innovation and Knowledge Diffusion (2023)
Working Paper: Global Innovation and Knowledge Diffusion (2022)
Working Paper: Global Innovation and Knowledge Diffusion (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed019:1364

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